Declare the data entities in the WCF service or project that the service referee, and then from the Silverlight project add the entities as links and make sure that the "Reuse in reference assemblies" check box is selected from the "Service Link Settings" dialog box.
You can put types in the direction of Silverlight or WCF.
I tried doing it this way and found that instead of using DTOs and matching them with entities in Silverlight, they would be much cleaner and more convenient to work with, although I wrote a bunch of mapping code to get DTOs in entities and vice versa.
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